DRY SODA CO.

Location: Seattle

Website: www.drysoda.com

Founded: 2005

Key Innovation: "Carbonated soft drinks have been around over a hundred years and they're the highest per capita beverage in the U.S. But there has been limited innovation in flavor," says founder and CEO Sharelle Klaus. She christened her product Dry Soda to reflect its lower sugar content and varied acidity levels that pair well with foods. Each bottle contains 50 to 70 calories and is flavored with a small amount of pure cane sugar. The sodas come in lavender, rhubarb, lemongrass and kumquat and are housed in an elegant glass bottle, for which the company has won 10 design awards.

Key People: A former consultant for Price Waterhouse, Klaus, in 1999, founded Planet Squid, a secure Web community for 10- to 13-year-olds. She was unable to maintain funding for the venture following the dot-com bust, but says she learned from the experience: "If you're going to start a company, you should do something you're extremely passionate about." She says she came up with the idea for Dry Soda after experiencing frustration with fine dining beverage options during her pregnancies. Klaus gives Jeanette Thebeau, the company's chief marketing officer, credit for defining the Dry Soda brand. "She has turned my vision into what I think is brilliant today," says Klaus.

Measure of Success: Sales have been evenly distributed among the four flavors, which are available at fine restaurants, specialty grocery stores, clubs and bars, and via the company's website. "We are creating a new category and we want to create an iconic brand," says Klaus. "Here in the U.S., our palates are much different than I think the soda companies are giving us credit for."

Employees: 22

What's Next: The company i s working with a chef to concoct two new flavors for 2009.

ZEVIA

Location: Seattle

Website: www.zevia.com

Founded: 2007

Key Innovation: "A lot of people out there know that artificial sweeteners are bad for them, but don't want the calories, so they continue drinking diet soda," says chairman and co-CEO Ian Eisenberg. Zevia's key ingredient is stevia, an herb from the South and Central American rain forests that's calorie-free, yet many times sweeter than sugar. The company's product line resulted from 18 months of research and development, triggered by president and co-CEO Derek Newman's desire for a healthier alternative for his wife. "She [Jessica Newman] drank diet soda sweetened with aspartame," he says. "It really bothered me because, otherwise, she eats healthy."

Key People: Derek Newman, an attorney, and Eisenberg, founder and majority shareholder of Blue Frog Media, are longtime friends. Jessica Newman, also an attorney, serves as vice president and director.

Measure of Success: Soon after its introduction at PCC Natural Markets, the brand sold out and was moved to a more prominent location in the store. "We like to think that our plan is as much education as advertising. ... Once [customers] taste it and they know it's good for them, it's a very easy sale," Eisenberg says. Zevia is the first U.S. company to market stevia in a soda and has a patentpending formula that the founders believe will help shield them from competitors.

Employees: 6

What's Next: As the company gains funding, it will spend more on promoting the brand, says Eisenberg. He adds: "Because we're in a really unique category, we don't have direct competition. I don't think we're going to be going head-to-head with Coke or Pepsi on Super Bowl ads." The company plans to expand up and down the West Coast and elsewhere in 2008 and may launch three new flavors.